Documents urge Village action on several fronts
Spurred by a Freedom of Information (FOI) request by a local resident, the recent release of the long-awaited 2022 Village audit is prompting both conversation and consternation throughout Lions Bay.
Long-time resident Gail Craig tells The Watershed that after repeated written requests (and one at a council meeting) to view the audit were ignored, she filed an FOI request, and received the full package of audit materials last week.
The 37-page document and accompanying Management Letter from audit firm BDO outlines — and in some cases, raises serious concerns about — Village accounting practices, financial statements and disclosures, highlighting areas that could be of financial risk to the Village.
The risks outlined in the Management Letter, which is dated April 16, 2024, include the potential for management fraud, the issuing of unauthorized payments and similar concerns. Although no evidence is presented of actual malfeasance, in Appendix 1 the auditors encourage staff and Council to review specific issues, including:
Instances where the names of individuals who were no longer working for the Village were not taken expediently off the bank accounts. BDO has recommended a formalized process to protect Village coffers.
Delays of up to ten months in the provision and approval of minutes for both regular and closed Council and committee meetings. BDO also identified at least one case where no minutes were available at all. It has offered a list of recommendations, most already outlined in Council procedures, the Community Charter and Local Government Act, to ensure that minutes are correctly taken, recorded, checked, approved and made available for public viewing in an expedient manner.
Three occasions are identified where personal email addresses were used to send official communications. "It was brought to our attention that one Village official provided banking instructions to the Village’s Bankers with regards to changing banking signatories through a personal email address, attempting to add themselves as a signing officer". All these actions are in violation of the Village's electronic communication policy. The name of the individual who made the attempt to add themselves as a signing officer was not disclosed.
BDO states that following the termination of the CAO and resignation of the CFO in December 2022, Council moved rapidly to install an acting CAO in early January. An acting CFO was then rapidly installed in mid-January. "These individuals were contracted on a temporary basis," BDO states. "To our knowledge, the appointment of these positions was not subject to a structured process and there is no evidence that multiple candidates were considered." While acknowledging the need to act quickly in such circumstances, the auditors recommended that when key roles are required to be fulfilled (whether contracted or otherwise), that the Village consider a pool of candidates and appropriately review their expertise and qualifications to ensure that they can fulfill those roles.
With regard to a number of closed meetings held both by Council and the Financial Committee on January 10, 13 and 17, the Village released a statement in the Village Update regarding "lack of financial controls." The auditors noted that they were not contacted for information purposes at the time, and further state "it is concerning to us that statements relating to the integrity of the Village’s financial controls were made publicly resulting from an investigation carried out by individuals who were new to the organization and did not have insight into the day-to-day operations of the Village’s financial systems, and where members of finance and the auditors were not involved to provide potentially important information on the matter. Making statements of this nature without sufficient and appropriate information potentially exposes the Village liability and operational disruptions."
Finally, BDO states that the "tone at the top", as established by Mayor and Council and senior management of the Village is critical to ensure the appropriate functioning of the Village.
Since November 2022, the report goes on to say, "the Village has experienced a deterioration of its internal control environment, driven by a lack of support for that overall control environment by Mayor and Council. Additionally, at times throughout our audit process, we identified a reluctance to disclose to us the decisions taken by Council."
Following the receipt of this report, Council put out a Request for Proposal (RFP) for a new auditor, marking an end to the long-term relationship with BDO.
The Watershed has contacted members of Council and senior staff for comment.
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What a tragedy! Because of a couple of disgruntled residents, supported by a few with over- inflated egos, this is what we have ended up with, in exchange for our former experienced, efficient and fiscally responsible Council and Staff. I urge everyone to pay close attention to the present, mind-boggling mismanagement, because we are all going to be paying for it in the end. We need to support the efforts of Councillors Reuter and Abbott who are working dilligently on our behalf to keep things legal and in check.
BDO has provided diligent, professional service to the Village as its auditors.
Rather than seek out new auditors that meet the “standards” of our Village Council and management, it appears the responsible way forward would be to sit down with BDO in order to discover ways to fix the apparent problems our financial management. That assumes, of course, that BDO is still willing to work with us.
Bringing new auditors “up to speed” would also incur a further needless expense for our community.
Given the concerns raised in the BDO Management letter, it would be interesting to see which accounting firms would actually be prepared to take on the auditing process for the Village in future should we continue to…
BDO's Management Letter included with the 2022 Audit, which is a year late, confirms our suspicions and concerns about financial mis-mangagement since November 2022. The Village's response to criticism? Find a new Auditor!
Would be interested in knowing what steps have been taken by Council and Staff to address these issues, particularly given the lack of transparency of this information. Why is this coming to light at this late stage. We need an explanation and response.